chapter 1 welcome to the world of marketing: create and deliver value

Chapter 1

Welcome to the World of Marketing:

Create and Deliver Value

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall1-2

Chapter Objectives Understand who marketers are, where they

work, and marketing’s role in a firm Explain what marketing is and how it provides

value to everyone involved in the marketing process

Explain the evolution of the marketing concept Understand the range of services and goods

that organizations market Understand value from the perspectives of

customers, producers, and society Explain the basics of marketing planning and

the marketing mix tools we use in the marketing process


Real People, Real Choices: Decision Time at Ron Jon Surf Shop, Inc.

Which tactic should Ron use to advertise at airports? – Option 1: Focus advertising on rental cars by

placing Ron Jon ads on maps and mirror hangers

– Option 2: Advertise on wall-mounted backlit photographs (dioramas)

– Option 3: Advertise on escalator


Welcome to a “Brand You”

You are a product and have “market value” as a person

You “position” yourself for a job interview Don’t “sell yourself short” Personal image consultants often help people

to devise a “marketing strategy” Your choice of goods and services allows

you to package and promote yourself


The Who and Where of Marketing

Marketers:– Are real people who make

choices that affect themselves, their companies, and millions of consumers (see “Real People, Real Choices”)

– Work cross-functionally within the firm

– Enjoy exciting, diverse careers

Get the scoop on marketing salaries! Visit the Occupational Outlook Handbook!

http://swz.salary.com/salarywizard/layouthtmls/swzl_narrowbrief_SM04.html


http://www.bls.gov/oco/ocos020.htm





The Value of Marketing

Definition of marketing (AMA, 2007)– Marketing is the activity, set of institutions,

and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large.


Marketing Meets Needs Marketing meets the needs of diverse

stakeholders– Stakeholders are buyers, sellers, investors,

community residents, citizens

Marketing concept– Identifying and satisfying consumer needs to

ensure long-term profitability


Marketing Meets Needs

Ron Jon’s success depends upon its ability to meet consumers’ intangible needs. Visit their Web site to learn more.

Ron Jon’s


Marketing Meets Needs The modern marketplace

– Takes many forms, including a mall, eBay auction, e-commerce Web site


Marketing Is about Creating Utility

Utility: The sum of the benefits we receive from using a product/service– Form utility– Place utility– Time utility– Possession utility


Marketing Is about Exchange Relationships

An exchange occurs when something is obtained for something else in return, like cash for goods or services– Buyer receives an object, service, or idea that

satisfies a need– Seller receives something of equivalent value

• Example: money, barter of services or goods, trade-ins


Exchange Relationships

The online game Second Life allows players to engage in virtual exchanges, in which players can purchase clothing or other goods in exchange for currency the game maker issuesRon Jon’s


The Evolution of a Concept

The Production Era– Production orientation

The Sales Era– Selling orientation

The Relationship Era– Consumer orientation– Total quality management

The Triple Bottom Line Era

Stardoll.com lets girls create their own fashions,

or dress celebrities in different outfits


The Production Era Dominated by production orientation:

– A management philosophy that emphasizes the most efficient ways to produce and distribute products

Marketing played an insignificant role Henry Ford’s Model T and Ivory soap

are examples of products that were created under a production orientation


The Sales Era When product availability exceeds

demand, businesses may focus on a one-time sales of goods rather than repeat business

Dominated by selling orientation:– Managerial view of marketing as a

sales function, or a way to move products out of warehouses to reduce inventory


The Relationship Era

Focused on a customer orientation:– A management philosophy that emphasizes

satisfying customers’ needs and wants

Marketing becomes more important in the firm

Total Quality Management (TQM) is widely followed in the marketing community


The Triple Bottom Line Era: Make Money and a Contribution

Focuses on building long-term bonds with customers– Triple orientation seeks

to maximize the financial, social, and environmental bottom lines

This ad focuses on the environmental bottom line



Marketing uses customer relationship management (CRM)– CRM involves systematically tracking consumers’

needs in ways that also benefit society and delivers profit to the firm

Social marketing concept: – Management philosophy that

marketers must satisfy customers’needs in ways that also benefit society and deliver profit to the firm

(RED)Video



Sustainability: – Creating products that meet present needs

and ensuring that future generations can have their needs met

Greater focus on accountability– ROI (Return on Investment) is the direct

financial impact of a firm’s expenditure of resources such as time or money


What Can Be Marketed?

From “serious” goods/services to fun things – Products mirror changes in popular culture – Marketing messages often communicate myths

Product: any good, service, or idea– Consumer goods/services– Business-to-business goods/services– Not-for-profit marketing– Idea, place, and people marketing


The Marketing of Value

Value: – The benefits a customer receives from buying

a good or service Marketing communicates the value

proposition: – A marketplace offering that fairly and

accurately sums up the value that the customer will realize if he/she purchases product/service


Value from the Customer’s Perspective

Customer perspective:– Value is the ratio of costs (price) to benefits

(utilities)– Value proposition includes the whole bundle

of benefits the firm promises to deliver, not just the benefits of the product itself

• Brand image is a critical component


Value from the Seller’s Perspective

Value for the seller takes many forms– Making a profitable exchange– Earning prestige among rivals– Taking pride in doing what a company does

well– Nonprofits: motivating, educating, or

delighting the public


Building Value Through Customers

Customers are now regarded as partners rather than victims

It is more expensive to attract new customers than to retain current ones

Calculating the lifetime value of a customer allows a firm to decide which customers are “worth keeping” vs. which should be “fired”


Providing Value through Competitive Advantage

Creating a competitive advantage requires:– Identification of a distinctive competency:

The ability of a firm to outperform the competition by providing customers with a benefit the competition cannot provide

Turning distinctive competencies into differential benefits


Differential Benefit?

Does this product provide a differential benefit that is important to consumers? Are the benefits provided to consumers unique and superior to those offered by the competition, and if so, is this competitive advantage sustainable?


Adding Value through the Value Chain

Value chain: A series of activities involved in designing, producing, marketing, delivering, and supporting any product– Inbound logistics– Operations– Outbound logistics– Marketing final product– Service


Figure 1.1A Value Chain for the Apple iPod


Figure 1.2Make and Deliver Value


Consumer-Generated Value:From Audience to Community

Consumer-generated value: – Everyday people functioning in marketing

roles such as:• Creating ads• Providing input into new product development• Serving as retailers

– Social networking is growing explosively• Wisdom of crowds

– Open source business models


Value from Society’s Perspective

Marketing transactions and company activities influence the world and add or subtract value from society

Stressing ethical or socially responsible decisions is often good business in the long run


The Dark Side of Marketing

Marketing is often criticized Illegal practices do occur Some marketing activities have

detrimental effects on society The dark side of marketing:

– Terrorism, addictive consumption, exploitation, illegal activities, shrinkage, anticonsumption


It’s DebatableClass Discussion Question

Some people feel that marketers manipulate consumers, while others argue that people should be held responsible for their own choices. This ad is critical of the current trend of lawsuits brought against fast-food companies by people who blame their health problems on the fast food industry. Where do you stand?

Visit ConsumerFreedom.com


Marketing as a Process

Marketing planning (thinking carefully and strategically about the big picture)– Analyzing the marketing environment – Developing a marketing plan– Deciding on a market segment– Choosing the marketing mix—product,

price, promotion, and place


Figure 1.3The Marketing Mix


Real People, Real Choices: Decision Made at Ron Jon Surf Shop

Bill chose option 2– Implementation: Ron Jon tested the use of

dioramas in the Orlando Airport at gate arrival and baggage claim areas. Survey data gathered at the Cocoa Beach store showed that shoppers noticed airport ads

– Measuring Success: Distributed 7,500 shopper surveys; collected demographic and travel data (for non-residents)


Keeping It Real: Fast-Forward to Next Class Decision Time at PaperBackSwap

Meet Richard of PaperBackSwap Firm is considering methods of

building Web site traffic and customers for PaperBackSwap

The decision to be made: Which environmental trend should be used to propel the new service into the limelight?


Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

chapter 1 welcome to the world of marketing: create and deliver value

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